Straban Township developer wants tax financing

The developer of the 2,000-home Discovery Gettysburg said the $680 million project would bring economic development to Adams County.

Touting a potential tax revenue increase, a Maryland-based developer is lobbying local officials to form a committee to apply for tax increment financing (TIF) to help pay for the development of an active adult community near Gettysburg.

Robert Karen, managing director of Symphony Development Group, said the financing would help fund Discovery Gettysburg, a $680 million project that over the next 12 to 15 years aims to bring 2,000 single-family homes to Straban Township for residents 55 years of age and older.

But first, officials from the three taxing bodies of the 790-acre property - Straban Township, Adams County and the Gettysburg Area School District - must agree to join the Adams County Industrial Development Authority in examining every aspect of submitting four $15 million tax increment financing applications for the four-phase project.

The industrial development authority is a subgroup of the Adams County Economic Development Corporation.

John Hartzell, Adams County solicitor, said the financing model essentially means using some of the increased revenue from the property's real-estate taxes as a means of paying for some component of the project.

The active adult community, slated to be built in the field directly south of Route 394 and east of Route 15, is expected to generate $4.5 million in annual tax revenue for the county and $12.5 million for the Gettysburg Area School District once it is fully built out, Karen said.

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Discovery Gettysburg officials, including local developer Rick Kline, have been presenting the project to the taxing agencies, hoping they all agree to come to the table and discuss the potential of applying for bonds that will fund $40 million of infrastructure improvements associated with the project, Karen said.

Discovery Gettysburg's legal counsel, Gettysburg-based attorney Bernard Yannetti, said the infrastructure costs would include water, sewer, roadway and other public facility costs.

Karen said the additional $20 million will pay for interest and issuance costs incurred by the bonds.

If officials agree to discuss the bond applications and receive approval, Karen said, 65 percent of the property tax revenue generated by the development would be used to repay the $60 million worth of bonds.

But, Karen pointed out, none of the government agencies would be considered borrowers or have any liability against the bonds that he said would be paid off in 28 years. Any shortfall, he said, would lie solely on the shoulders of the developer.

"We see this as a win-win for us and the three governmental entities," Karen said. "We hope they participate with us."

If the developer's tax increment financing option fails to come to fruition, Karen said he does not have alternative financing plans in place.

"Since the real estate crash of 2007, the whole real estate finance world has turned topsy-turvy," Karen said. "Without the TIF, we would go back to the huddle and figure out what's next."

Adams County commissioners said they have not yet received a formal application to join the committee of governmental agencies, but that tax increment financing is nothing new.

"You can probably Google this and see it happening all over the place," said Randy Phiel, commissioner chair. "My guess is you'll see a lot of successes and some failures as well. It just hasn't happened much in Adams County."

Fellow commissioner Marty Qually said at full buildout, Discovery Gettysburg would have a significant population impact on Straban Township, bringing in roughly 3,400 new residents, more than half of the township's 2010 Census Bureau population of nearly 5,000.

Karen was quick to point out that the school district stands to gain a lot from the development since the additional $12.5 million in annual tax revenue would be acquired with no new students straining the district's resources.

Robin Fitzpatrick, executive director of the Adams County Economic Development Corp., said that since she started with the ACEDC in 1998, there have been no successful tax increment financing applications. She said Kline and Karen presented their project to the Adams County Industrial Development Authority at its Aug. 22 board meeting.

"If (the taxing bodies) are willing to participate in learning about the process, then we will be a member of that committee as well," Fitzpatrick said.

The Gettysburg school board was briefed on the project Monday. Straban Township supervisors will hear about the proposal to join the committee at its Oct. 7 meeting. Adams County commissioners heard of the project at the board's Aug. 28 workshop.

Brad Hunt, business manager for the Gettysburg school district, said speculation at this point would be premature.

"The district has to learn more about the project before making a judgment on moving forward," Hunt said. "We need to get a better understanding of what the total impact is."

The first phase of the project was approved by Straban Township with conditions six years ago, according to Sharon Hamm, township supervisor. Since then, the other three phases have received preliminary approval from the township.

"When you think about the purpose of the TIF, that makes a lot of sense to me," Hamm said. "But I don't know how it will play out."

Karen, who has been developing active adult communities for 40 years, said he has built more than 20,000 houses in different states. He is the chair of the National Association of Home Builders' 50-plus Housing Council.

He said the price range of the primarily single-family homes will be between $200,000 and $400,000, making the community an attractive retirement destination for people from the surrounding metropolitan and suburban areas of Baltimore and Washington, D.C.

Karen said some of the homes will be attached units, with their sizes ranging from 1,250 square feet to 3,500 square feet. The community will also contain a clubhouse and various recreational facilities.

Karen said there is no strict deadline for the governmental agencies to decide if they want to form a committee, but he would like the process to move along so construction can start by next summer.